Goldman Sachs Group Inc. (GS) is meeting investors today to sell the first bonds entirely backed by Italian commercial mortgages since 2006.
The notes are backed by a 363 million-euro ($489 million) loan the U.S. bank provided to a real estate fund to buy shopping malls and retail parks in Italy, according to a statement from Fitch Ratings. The fund was set up by a property unit of French food retailer Groupe Auchan SA, which has outlets at each of the 15 locations, and Morgan Stanley.
Goldman Sachs is marketing the Gallerie 2013 Srl bonds a day after Permanent TSB Group Holdings Plc (IPM) sold Ireland’s first residential mortgage-backed securities in six years. Issuance of commercial property notes in Europe has risen to 8.4 billion euros this year compared with 3.8 billion euros in the same period of 2012, and the most since 2007, according to JPMorgan Chase & Co. data.
“It’s a positive sign that we’re seeing diversity in supply, and it shows that investors are willing to look past headlines and actually consider potential investment in peripheral exposures,” said Gareth Davies, the London-based head of JPMorgan’s European asset-backed securities research.
Sophie Bullock, a spokeswoman for Goldman Sachs in London, declined to comment on the transaction.
The last commercial mortgage-backed deal to be backed solely by Italian real estate was the Patrimonio Uno CMBS Srl transaction sold in June 2006, according to data compiled by Bloomberg. The 398 million euros of notes were arranged by Banca Nazionale del Lavoro SpA, Intesa Sanpaolo SpA and Morgan Stanley (MS) and were mostly secured by properties rented to Agenzia del Demanio, an Italian government department.
Repayments from older CMBS transactions and untapped demand for assets means investors have appetite for more deals from Europe’s periphery, said Patrick Janssen, a fund manager at M&G Investments in London, which oversees 20 billion euros of asset-backed securities.
“The CMBS market has shrunk a lot over the past few years,” said Janssen. “There’s definitely demand for peripheral issuers.”
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